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Financing Industrial Energy Efficiency in India: Who will Invest?
Industrial energy efficiency across sectors covered under the Perform, Achieve and Trade (PAT) scheme sectors (excluding the thermal power sector) has an investment potential of about Rs 34,000 crore (~USD5 billion) by 2020, according to analysis undertaken by Sustainability Outlook and AEEE. The latest issue of PAT Pulse (a quarterly market briefing series on the PAT scheme) analyzes the most optimal financing routes for realizing the estimated investment potential and the strengthening measures needed for achieving a successful and sustainable trajectory for the industrial energy efficiency market in India.
The brief reveals that size of the company as well as its willingness to contribute to the overall financing of energy efficiency interventions are the key determinants of financing patterns.
Analysis suggests that cross-cutting technologies (e.g. VFDs, Waste Heat recovery, etc. that cut across industries) have maximum potential for Vendor finance/ESCO model. Projects in the Chlor-Alkali and Aluminum sector can account for maximum financing through project specific term loans (>5 yr tenure) whereas a significant number of projects in the Cement and Fertilizer sector be financed by being clubbed with loans within existing lines of credit. The brief also discusses that policy push and standardization in energy efficiency projects are key levers to realize the investment potential of India’s industrial energy efficiency market.
As per Mr. Shubhashis Dey, Programme Manager (Industry), Shakti Sustainable Energy Foundation, “There is an urgent need to consolidate public and private opinion on energy efficiency under a common platform with an aim to create common goals and language. PAT Pulse is a welcome endeavor in this respect. The current issue of PAT Pulse provides a high level understanding of technology interventions, size of investment, financing models at sectorial level for projects related to PAT.”
According to Dr. Satish Kumar, Executive Chairman, AEEE, “Financial institutions have different approaches for industrial energy efficiency and the need is to build standard financing offers/framework to scale up energy efficiency. This brief is a step in that direction and attempts to build a framework for assessing the optimal routes for realizing the investment potential in financing”
“When it comes to financing energy efficiency interventions in Industry, the challenge is not availability of capital but rather the willingness to invest in this domain. Need of the hour is a stronger policy push and standardization of efficiency projects to incentivize industry” according to Aparna Khandelwal, Sr. Engagement Manager, Sustainability Outlook.
The September issue of PAT Pulse also provides updates on policy regarding terms and conditions for Exchange of Energy Savings Certificates and the roles of multiple entities associated with the trading. Further, it provides a sneak peek into new solutions in the area of energy efficiency including water-free fabric dyeing technology, deep eutectic solvents, top gas recycling blast furnace etc.
The complete issue of PAT Pulse is available for download at:
PAT Pulse, a quarterly briefing series on PAT with DCs, policy makers, catalysts and industry experts to capture the pulse of the energy efficiency market in India has been produced by Sustainability Outlook and Alliance for Energy Efficient Economy (AEEE) in collaboration with Shakti Sustainable Energy Foundation. The objective of PAT Pulse is to provide evidence based, market assessment tool to present the stakeholder view point, enable higher uptake of PAT through peer learning and incubate industry and policy action on energy efficiency.
About Sustainability Outlook
Sustainability Outlook, a division of cKinetics, is a market intelligence, discovery and collaboration platform facilitating sustainability linked actions amongst businesses, policy makers and investors. Sustainability Outlook actively tracks and provides market insights in resource management with focus on policy, technology and finance to work towards creating closed loop systems. Solutions offered by Sustainability Outlook include State of Sector Reports, Market development platforms, tools and frameworks for enabling and promoting resource sustainability within the industry, Regulatory and policy analysis and Resource inventorization studies amongst others.
About Alliance for Energy Efficient Economy (AEEE)
AEEE is an industry association created for the specific purpose of convening companies and organizations (manufacturing companies, end users, service providers, utilities, academic and R&D institutes and other non-profit organisations) interested in creating a thriving energy efficiency sector in India and providing a unique platform to actively participate and support in energy efficiency policy formulation and analysis.
About Shakti Sustainable Energy Foundation
Shakti Sustainable Energy Foundation works to strengthen the energy security of India by aiding the design and implementation of policies that support energy efficiency, renewable energy and sustainable urban transport solutions.